LOS ANGELES — American Apparel’s wind down has accelerated with a large number of workers expected to be given pink slips Monday, according to sources.
A source said the layoffs began Friday, a day after a bankruptcy court judge approved the sales of various parts of the business. A spokeswoman denied any layoffs Friday, saying “that is categorically false.” She declined to comment on the expected activity Monday.
Security patrolled the company’s downtown Los Angeles factory and headquarters Friday, steering vehicles entering the premises away from any entrances to the facility.
The cuts Monday will be across the board, ranging from factory workers to mid- and high-level management and could total thousands, said one employee, who requested anonymity.
Workers sponsored by American Apparel had their work visas revoked this past week, according to two sources.
“I think everyone was hoping — to be fair to the upper management — they were really, really hoping for a different outcome and really tried for a different outcome, but it didn’t happen,” said one employee.
American Apparel in November warned the California Employment Development Department of possible layoffs across its Los Angeles, South Gate and Garden Grove facilities — totaling nearly 3,500 workers — but the company at the time called the move a legal precaution tied to uncertainty surrounding a possible sale of the business.
Some workers were let go starting at around the time of the notice, but it was nothing of the magnitude expected Monday, according to one employee.
The sale to Gildan of American Apparel’s intellectual property and some equipment for $88 million plus $15 million for wholesale inventory purchases was the largest deal approved by the bankruptcy judge last week. A smaller deal for the company’s Garden Grove facility to Broncs Inc. was said to have been tentatively struck and could retain some of the lost jobs at that facility, which as of November, had 332 workers. The Los Angeles factory and headquarters is the largest by worker count, with 2,166 people there and another 959 at the South Gate facility, as of November.
A source close to the situation claimed more jobs could have been retained, based on the original purchase agreement with Gildan, but those were taken off the table with a competing offer that came in during the auction from Next Level parent YS Garments Inc., which offered more money with no jobs.
American Apparel chief executive officer Chelsea Grayson sent a letter to workers late on Thursday reminding them of on-site job and training resources and a job fair pooling recruiting firm Right Management Group, the Los Angeles County Economic Development Corp. and government services employees, among other groups, to assist workers.
Gildan is expected to retain some employees during the transition period, although one employee said, while the number is in flux, it’s likely to be less than 50.
Meanwhile, liquidation of the company’s remaining stores is imminent with the wind down of the retail part of the business expected in the next 90 to 120 days, the employee said. The license to use the American Apparel name at retail, according to the purchase agreement, is good for 100 days as of the Gildan sale’s closing date, which is expected to be some time next month.